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France Plans 5% Digital Tax as Governments Chase Internet Giants

bloomberg.com

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Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#21

Post by platz »

yoz-y wrote: post #7
yann63 wrote: post #2

Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?

It's because for an international company there is really no clear cut way to say what is tax evasion and what is not. If your company is incorporated in France, has offices in Ireland and serves customers all over the world, how do you calculate where to pay what? Sovereign countries are free to set their tax rate to 0 in order to attract companies there.

I'm pretty sure Google does not have a problem figuring out that the source of it's profits are not occuring in Ireland.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#22

Post by throwaway123mmm »

glutamate wrote: post #12
ulfw wrote: post #9

Earlier quoted context omitted.

To ddebernardy's point then, why not charge VAT?

I assume this is on top of VAT (the article does not say).

Companies dont pay VAT. And google's reveneus are mostly ads for companies.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#23

Post by MatthewWilkes »

allahreturns wrote: post #11

Tax on sales is bad. It will hit the startups the most. Why? Most big companies have economies of scale and small companies must pinch every dollar. Already tax avoidance is best done by large players, not small ones. So please vote against it if you are an entrepreneur and wanna become rich through entrepreneurship and hard work.

TFA says: it applies to companies with global sales of "750 million euros and French sales above 25 million euros"

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#24

Post by mtsr »

madeofpalk wrote: post #16
mtsr wrote: post #8

Earlier quoted context omitted.

Tax evasion is, but tax avoidance isn’t.

What's 'tax avoidance'? Doesn't everyone avoid tax when they claim expenses and make deductions?

Exactly, and when companies do the same thing it’s legally considered perfectly fine.

Morally can be a different matter, though.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#25

Post by kgwgk »

sharpneli wrote: post #20
ulfw wrote: post #9

Earlier quoted context omitted.

To ddebernardy's point then, why not charge VAT?

VAT is generally not paid from b2b transactions which are the vast majority of ad sales. To be precise you do pay VAT in some cases but then it is refunded. So no money to government.

VAT would be only partially refunded. Unless you’re selling your product/service for less than it costs you, not a good business model.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#26

Post by ui-explorer12 »

madeofpalk wrote: post #16
mtsr wrote: post #8

Earlier quoted context omitted.

Tax evasion is, but tax avoidance isn’t.

What's 'tax avoidance'? Doesn't everyone avoid tax when they claim expenses and make deductions?

yes - so maximizing your use of any method to reduce your tax burden is (a) the smart thing to do and (b) the (a)moral imperative of a corporation.

not a judgement call, just not sure how you frame the raison d'etre for something that oesn't embody life to begin with.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#27

Post by allahreturns »

MatthewWilkes wrote: post #23
allahreturns wrote: post #11

Tax on sales is bad. It will hit the startups the most. Why? Most big companies have economies of scale and small companies must pinch every dollar. Already tax avoidance is best done by large players, not small ones. So please vote against it if you are an entrepreneur and wanna become rich through entrepreneurship and hard work.

TFA says: it applies to companies with global sales of "750 million euros and French sales above 25 million euros"

Someday company by any entrepreneur will also do 750M in sales, should we tax such entrepreneur who risked his everything just so that bunch of politicians are able to plunder that money and pass on to their relatives?

Thing is tech companies are very efficient compared to old type of companies like Real Estate etc ..

Politicians/Mafia see that money is being made but they don't know how to get cut of it.

Most of the money is moving digitally and politicians are growing poorer day by day

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#28

Post by throwaway2048 »

sytelus wrote: post #13

At least in US Amazon already adds tax in purchase price. Similarly when you buy copy of software, tax is already added. For ad bills to publishers, I would think it’s the same. So what does this “digital tax” is about? The big issue here is that eventually all taxes will be transferred to end customers. The profits for businesses don’t get lowered because of more taxes (unless demand drops). So people in every count…

To portray taxes as only being paid by the end customers is a massive oversimplification, if businesses could charge the amount extra the tax supposedly increased prices by and retain optimal profitability, they already would.

Taxes hit profit margins first, possibly pushing companies into non viability (unlikely to be much of a concern in this arena).

Remember that businesses don't just operate based on the cost of their inputs, they operate based on the price customers are willing to pay for their outputs aswell, which is often divorced entirely from the cost of inputs, especially in markets dominated by a few companies.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#29

Post by gzeus »

yoz-y wrote: post #7
yann63 wrote: post #2

Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?

It's because for an international company there is really no clear cut way to say what is tax evasion and what is not. If your company is incorporated in France, has offices in Ireland and serves customers all over the world, how do you calculate where to pay what? Sovereign countries are free to set their tax rate to 0 in order to attract companies there.

But shouldn't they like pay taxes for where the customer is from?

Suppose a guy from US purchases the service, shouldn't tax be paid there. Isn't that how its supposed to work? Taking only in terms of Giants.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#30

Post by ddebernardy »

yann63 wrote: post #2

Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?

> Couldn't we just ban tax evasion? What makes it so hard? (honest question)

Two things, mostly. The first is lack of financial transparency. The other is how corporate tax is levied.

With respect to transparency, there's no shortage of options to create structures in tax havens such that there's little if any paper trail that ties it to their owners or beneficiaries. And just in passing, the US and the UK are not void of problems here; on the contrary, they regularly appear on worst offenders lists:

https://www.theguardian.com/us-news/2016/apr/06/panama-paper...

The other issue is basically related to accounting and how corporate tax gets levied. If you're a multinational, it's possible to set up a subsidiary in a place with to no corporate tax and make your international profits all appear there instead of coming home where they get taxed. (This is the reason US businesses were so many billions abroad in the run up to Trump's tax cuts.) Related to this is the ability to move money out of countries that do tax, using questionable licensing fees and accounting tricks the like. Example:

https://www.telegraph.co.uk/business/2016/04/20/mcdonalds-fr...

Anyway, to fix this you basically need to get all countries together so there's more transparency, and dig into how corporate taxes get levied.

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